What is your money plan?
I lost a battle with a clickbait-y headline last week.
Really, I never stood a chance. It sucked me in the second I saw it.
“I don’t track my spending and I’m not sorry,” the headline screamed.
I couldn’t help but to click the link. What can I say? I was curious. At least that’s the easy explanation.
Deep down, I could relate.
I still don’t truly track my spending. I might look for patterns and tally what I paid. I certainly compare and contrast from month to month and year over year. But all that shows is what I did long after I’ve done it. Any leaks in my spending won’t be spotted until the end of the month, meaning I’m not enjoying one of the major benefits of tracking.
So don’t bet on me bragging about it in headlines here. I’m not proud of it. But my method works for me, although I could be more diligent.
Two things have allowed me to get away with not consistently tracking my spending. I’m not a big or frivolous spender. Major purchases were never my thing, and I’ve eliminated most spontaneous spending. The other thing is I’ve also organized my finances to where I’m funneling most of my money to planned places.
But I don’t have a system.
If you asked me for a percentage breakdown of how I disperse my after-tax income, I’d shoot you a blank stare. I’m still developing that level of detail.
But in the same week that a wealth-building workshop introduced me to one method, the author of the article with the attention-grabbing headline offered another spending plan.
Here’s how it works: Every month I budget a certain amount for various categories like gas, groceries, pets and personal spending. On payday, I automatically transfer amounts into those funds and update the totals in a budgeting spreadsheet. As long as money is available in those funds, I know what I can spend and what I can’t.
If I don’t spend the allotted amount in a month, it rolls over to the next month.This still allows you to make savings goals as well. All you have to do is make that one of the places you automatically transfer money to during the month.
Last year, Ro$$ Mac made me aware of the 50-30-20 rule. That calls for you to direct 50% of after-tax income to necessities, 30% to wants and 20% to savings and debt.
In his free webinar last week, Market Briefs CEO Jaspreet Singh alerted me to a variation: the popular 75-15-10 rule. Singh called it leading your money. This iteration calls for you to put 75% of after-tax income to daily expenses, 15% to investing and 10% to savings.
Do you have a plan for your money? If not, do you need one?
I’m still adhering to a few fundamental money principles as my guides. I’m living below my means, carrying low debt and investing every penny I can.
Someday I’ll carve out time to calculate my percentages.
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I try to not get too granular with tracking stuff, especially how much goes into savings and what not. Just save as much as you can and let time do its thing. Our savings are automatically squirreled away with each check and I usually check my preferred budget app at the end of the month just to see where the totals end up.
Really though, I just see how much we have in checking at the end of the month and move any excess into the savings account. If we overspent I'll see it there.
I think that budgeting or tracking has its time and place (i.e. getting out of debt, trying to get a visual picture of where spending is going, etc).
But, once this has been established, I have found that the 80/20 rule applies in that what "moves the needle" most are the Big 3 expenses of housing, transportation, and food.
If one focuses the most time on these 3 in terms of getting them into a manageable spot (no/low car payments, buying less house than qualified for, buying generic food, etc) then it becomes difficult to overspend.